Trump to Announce Easing of Auto Parts Tariffs and Overlapping Tariffs Today

Rising car prices and additional costs for companies remain inevitable

Partial refund starting at 3.75% of the value of domestically produced cars

As the U.S. auto industry faces an unprecedented crisis due to tariffs, the Trump administration plans to announce the easing of auto tariffs on the 29th (local time). This news led to a rise in the stock prices of automakers such as Tesla, General Motors, Ford, and Stellantis in pre-market trading on the New York Stock Exchange on the 29th.

According to Bloomberg and MarketWatch on the 29th (local time), a White House official stated that they are pursuing the abolition of some tariffs on foreign parts of cars and trucks produced in the U.S. Additionally, for imported cars, tariffs on aluminum and steel are expected to be deferred to prevent overlapping tariffs on these materials.

According to the Wall Street Journal, these changes come as President Trump approaches his 100th day in office and prepares to visit Michigan, the heart of the U.S. auto industry. The easing of tariff policies on cars is expected to be signed on the 29th before President Trump's speech in Macomb County, Michigan, according to White House sources.

Commerce Secretary Howard Lutnick also emphasized the tariff easing in an email statement, saying, "The easing measures will compensate domestic producers and help manufacturers who have expressed their intention to expand domestic production through investment."

These policy changes are announced ahead of the 25% tariff on foreign auto parts set to take effect on May 3.

According to officials, automakers will be able to partially refund tariffs on imported auto parts starting at 3.75% of the value of cars produced in the U.S. However, the refund amount will decrease over time to encourage automakers to move their supply chains to the U.S. This is expected to mitigate the impact by up to 50%.

Additionally, by excluding cars from the tariffs on steel and aluminum, which have been criticized as double tariffs, the plan is to prevent double tariffs on imported cars.

According to MarketWatch, when combining the current tariffs on auto parts, steel, and aluminum, as well as tariffs related to the import ban on fentanyl from Mexico, Canada, and China, and reciprocal tariffs, more than 170% tariffs are imposed on Chinese display units used in cars. Nearly 80% tariffs are imposed on leaf springs imported from Mexico.

According to Wall Street estimates, this burden could offset all industry profits. For example, GM is expected to generate about $10 billion in operating profit based on current profitability out of $120 billion in U.S. sales this year. However, based on the tariffs announced so far, GM's costs are calculated to increase to $20 billion to $40 billion, making a huge deficit inevitable.

Under the new tariff system, GM's additional costs could still increase to $10 billion to $15 billion. Although still significant, it is reduced compared to $40 billion.

New car prices are still expected to rise by about $2,000 to $4,000. If overlapping tariffs are applied, they were expected to rise by $5,000 to $10,000.

Automakers, dealers, and parts suppliers have appealed for relief, saying Trump's tariffs risk disrupting the tightly integrated North American supply chain.

Six U.S. auto industry groups stated in a letter to the administration last week that import tariffs on auto parts could increase domestic production costs and jeopardize efforts to revive U.S. auto production.

Guest reporter Kim Jung-ah kja@hankyung.com